Debt Settlement Program

When you are struggling to repay your debts, a debt settlement program may seem like the answer to your prayers.  You enter into this program and suddenly the continuous phone calls from your creditors stop and life can return to normal. But this is often far from the truth.  Not all people are eligible for these programs and not all your debts will be covered. For example, you need to owe each of your creditors at least $1000.  It is only amounts over $1000 that will be accepted by many firms.  The main problem with these firms is that they charge high fees and when you are in debt the last thing you can afford to do is pay someone else to sort out your finances.

But you can enter into your own debt settlement program.  If you make a list of all your creditors and see how much you owe and how long you have left on the debt. If you can afford to make a lump sum payment either by working a lot of extra hours or selling some stuff to generate the extra cash, ring the credit company and ask them if they would be willing to accept a lump sum in final settlement of your debt. If they say yes, and they often do, ask them to confirm this in writing before you pay over any cash. Be warned though as paying off debts under a debt settlement can have adverse consequences.  For one thing it can adversely affect your credit score although if you are drowning in debt, you probably are not concerned about this.  But it can cause a tax issue as well. The IRS can treat these payments as income but this will depend on your individual circumstances.

So where can you get advice on how to negotiate with creditors and how these talks will affect you based on your personal circumstances.  See if you can find a nonprofit credit card consolidation company in your local area.  Failing that, many charities will offer a debt management program for little or no cost.  They will negotiate with your creditors on your behalf and train you on how to better manage your finances at the same time.  Certain Churches will also provide Christian debt counseling services which may help you.

There are no easy solutions to getting out of debt but the key is to stop thinking your problems will disappear and take action.  The sooner you start to take control over your finances the nearer your debt free day will be. You never know, after talking to the experts, your debt situation may not be as bad as you thought. 

Experts in debt consolidation, nonprofit especially may take a while to see you i.e. there may be a waiting list for appointments but it is often better dealing with these companies and using your extra funds to pay down debts than paying huge fees to people who promise to sort out your debt problems  under a debt settlement program but are rarely able to keep to their word.